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Table of Contents
Operating Expenses
Information about our operating expenses is as follows:
In evaluating our results, we focus on operating margin excluding stock-based compensation, employer payroll taxes on employee stock
transactions, amortization of intangible assets, the write-off of in-process research and development, acquisition-related items, and the net effect
of the amortization and capitalization of software development costs as we believe this measure reflects our ongoing business in a manner that
allows meaningful period-to-
period comparisons. Operating margins decreased from 16.6% in 2008 to 10.8% in 2009 and from 17.7% in 2007 to
16.6% in 2008, primarily related to stock-based compensation and capitalized software development costs, as opposed to any structural changes
in how we manage or invest in our business. These items are shown in the table below.
50
For the Year Ended December 31,
2009
2008
2007
Operating expenses:
Cost of license revenues
$
126.7
$
88.2
$
80.9
Cost of services revenues
233.0
215.9
137.8
Research and development
496.6
429.2
285.9
Sales and marketing
736.4
654.1
450.2
General and administrative
212.0
181.1
135.7
Total operating expenses
$
1,804.7
$
1,568.5
$
1,090.5
Operating income
$
219.3
$
312.5
$
235.3
Percentage of revenues:
Cost of license revenues
6.3
%
4.7
%
6.1
%
Cost of services revenues
11.5
11.5
10.4
Research and development
24.5
22.8
21.6
Sales and marketing
36.4
34.8
34.0
General and administrative
10.5
9.6
10.2
Total operating expenses
89.2
%
83.4
%
82.3
%
Operating margin
10.8
%
16.6
%
17.7
%
For the Year Ended December 31,
2009
2008
2007
Cost of license revenues
Stock
-
based compensation
$
1.3
$
1.1
$
0.6
Intangible amortization
11.7
11.3
21.2
Capitalized software development costs amortization
82.9
51.6
36.4
Cost of services revenues
Stock
-
based compensation
14.9
13.5
6.1
Employer payroll tax on employee stock transactions
0.2
0.2
—
Intangible amortization
0.3
—
—
Research and development
Stock
-
based compensation not capitalized
121.8
78.0
42.9
Employer payroll tax on employee stock transactions
1.7
2.8
—
Intangible amortization
0.1
—
—
In
-
process research and development
—
6.6
—
Total capitalized software development costs
(83.5
)
(113.6
)
(56.8
)
Stock
-
based compensation included in total capitalized software development costs
above
14.9
22.7
9.1
Sales and marketing
Stock
-
based compensation
58.6
49.8
26.3
Employer payroll tax on employee stock transactions
0.6
1.3
—
Intangible amortization
1.6
3.6
2.6
General and administrative
Stock
-
based compensation
34.9
24.2
16.6
Employer payroll tax on employee stock transactions
0.4
0.5
—
Intangible amortization
0.5
2.6
2.0
Acquisition
-
related costs and other
1.6
—
—